Earlier this week, Take-Two Interactive canceled development of Snow, a crime-simulation game that would cast players as an aspiring drug dealer. At the time, it was assumed that the publisher axed the project to stave off controversy akin to the "Hot Coffee" scandal, which plagued it for the latter half of 2005. The affair saw the uncovering of several hidden sex minigames in Grand Theft Auto: San Andreas, the bestseller from Take-Two subsidiary Rockstar Games.

Though accessible only via third-party PC modifications or game-cheat console accessories, the San Andreas sex minigames caused a furor among antigame activists and in the mainstream media. Politicians swiftly pounced on the outcry, sparking a series of state laws banning the sale of rated games to minors. It also sparked action on the federal level, with pressure from US senators Hillary Clinton (D-NY) and Joseph Lieberman (D-Conn.) demanding an investigation of Take-Two by the Federal Trade Commission.

As a result, the game was eventually rerated from M for Mature to AO for Adults Only and was pulled from most major retailers. Take-Two quickly released a patch that would excise the offending minigames from the PC version of the title, available at www.nomorehotcoffee.com. Later in the year, edited, M-rated versions of the PC, Xbox, and PlayStation 2 versions of the games shipped--and reentered the bestseller charts. However, Take-Two estimates the costs associated with the recall at around $24.5 million--not to mention the beating the company's stock took as a result.

Today, nearly a year after Hot Coffee boiled over, the FTC handed down its final ruling on the matter. While it could have been much worse for Take-Two--no fines were imposed--the carefully worded ruling does officially declare that the publisher "failed to disclose important information about the game's content to consumers." Initially, Take-Two had blamed postrelease third-party modifications for the sex minigames, even though first-edition copies of the PS2 game were found to contain them.

"Parents have the right to rely on the accuracy of the entertainment rating system," said Lydia Parnes, director of the FTC's Bureau of Consumer Protection, in a statement. "We allege that Take-Two and Rockstar's actions undermined the industry's own rating system and deceived consumers."

The FTC ruling warns Take-Two and Rockstar that they "cannot misrepresent the rating or content descriptors for an electronic game." It also requires them "to clearly and prominently disclose on product packaging and in any promotion or advertisement for electronic games, content relevant to the rating, unless that content had been disclosed sufficiently in prior submissions to the rating authority." Lastly, it orders them to "establish, implement, and maintain a comprehensive system reasonably designed to ensure that all content in an electronic game is considered and reviewed in preparing submissions to a rating authority."

"This is a matter of serious concern to the commission, and if they violate this order, they can be heavily fined," said Parnes. Indeed, the FTC ruling would levy a fine of "$11,000 per violation" on Take-Two.

[UPDATE 5] So just what constitutes a violation? "That depends," an FTC rep told GameSpot. "Different courts have ruled on different FTC rulings in different ways." The rep said that some courts have levied single fines for each general violation--which means that Take-Two would receive just a single $11,000 fine for each title that was deemed to violate the order. That would be little more than a slap on the wrist in the case of San Andreas, which has generated over $336 million in US sales as of April 2006, according to the NPD Group.

However, the FTC rep also said other judges have decided to levy fines for each instance a violation occurs. The example the FTC rep gave was a direct-mail operation who was fined for each letter sent. If that model was applied for each copy of San Andreas sold, it would mean catastrophic costs for Take-Two. According to NPD, San Andreas has sold over 7.27 million copies in the US on all platforms as of April 2006. Were the FTC to retroactively levy the fine on every copy of the game today, Take-Two would be penalized over $79 billion dollars.

However, today's ruling makes it clear the fine is for future infractions of today's ruling only, and San Andreas would not be affected. However, just last month, another multiplatinum Take-Two game, The Elder Scrolls IV: Oblivion, was rerated from T for Teen to M for Mature. At that point, the game had sold over 1.7 million copies--which could have resulted in $1.87 billion in penalties, if a per-game fine was levied.

Still another option previously taken by judges was to levy a fine for each day a company was in violation of an FTC order. That could potentially result in hundreds of thousands of dollars in fines for Take-Two, were it not to act quickly. Attempts to elicit comment from the publisher on the FTC ruling were unsuccessful as of press time.

Two Steps Behind, the problem wasn't that ESRB rated it wrong, it was that Take Two didn't inform the ESRB of the Hot Coffee code in the first place. It was a stupid assumption that the code would not be found my modern-day hackers and modders: one of the most stupid things they possibly could have done. So, because of Take Two, the ESRB did not know about the Hot Coffee minigame when they rated it. Thus, the whole issue is Take Two's responsibility. But if they actually do the same thing again and cause us to trudge through the idiotic claims of people like Jack Thompson and Hilary Clinton one more time, they better as heck get destroyed. This better not happen again. Though I also don't see wh ythis wasn't a problem back when all you could do was rape someone, kill them, and take all their money. Seems bad enough already to me...

what is wrong with people in our country? why is violence so accepteable, but yet sex is such a taboo subject? it's such a hypocrisy, how many poloticaians out there that have publicly demonized things in the media but have been found to participate in those things they've claimed are immoral? f***ing prudes.

If GTA wants to survive this the developers had best seek refuge at SCEA or some other company willing to take them on.
Charging 11k for each copy is a ridiculous notion, one the federal government should even rebuke. Games are a valuable part of the economy, by unjustifiedly posting such a ludicrous fine they're hurting themselves.

This truely is sad! Why are so many offended? My god it just a G-A-M-E! It has a rating of M-A-T-U-R-E for a reason! That reason being that is is INTENDED for M-A-T-U-R-E persons ONLY! Too many people make a big deal out of someting so small. It's a game with a M sticker on the front and it is there for a reason! I hope in the next GTA I am able to fly planes in buildings! Just to piss people of! It's all in F-U-N! Not to be taken literally! Please, if you are offended by anything, do not play at it! Let the mature non-offended people enjoy it!

"THE EXAMPLE" the FTC rep gave was a direct-mail operation who was fined for each letter sent. If that model was applied for each copy of San Andreas sold, it would mean catastrophic costs for Take-Two. According to NPD, San Andreas has sold over 7.27 million copies in the US on all platforms as of April 2006. Were the FTC to retroactively levy the fine on every copy of the game today, Take-Two would be penalized over $79 billion dollars.

we need to protest this crap this isn't fair why should people be denied to play games that shows most of the harsh realities of life, this isn't a barney type world dammit.People who are supposed to play it are adults who do "adult things" and if the kids cant play it, fine stick a big sticker that says "caution: may scar your child for life don't buy it"

all this does is prove that the people in office have nothing to do but worry about things they know nothing about instead of tryin to help poverty or our dying troops no no no their more worried about a videogame if stupid parents would read the box maybe little jonnny wouldn't end up with gta or your disturbed teen come on poeple this isn't complicated, u don't see little jonny rollin in the adult store with his mom sayin I want that no u know why cuz its freakin comin sense man a swear can the people in office be any worse right now

how come all you people are saying that take two got screwed? they didn't even get fined. the 79 billion figure was just a speculation of what could happen in the future. all they gotta do is not misrepresent their games to the rating board and they will never get fined and they can still put whatever crap they want in their games as long as they don't mind "M" or "AO" ratings on their packages. what's the big deal?

Bleh, im against Polititions getting their noses in Video Games. Their the people who blamed Doom for the Columbine Shootings. If take-two is stupid for their video games content, then they are just as "Special". Im on Take-Two's side all the way. I'd love to see another GTA. I completely agree with DJGeki.

You rightly accuse me of spamming up the place... but I don't see anywhere in your post where you are discussing the topic at hand. So in effect, that also equals spam. Did fail you to see that?!
So, what were you saying?

Everyone who is screaming that 'Hot Coffee' was just a user created MOD, get a clue. The minigames were in the ORIGINAL game code. The cheatcodes (console) and 'mod' (PC) just unlocked the minigames. If it was a 'mod' how was it in the original PS2 release? You can't mod console games.
The whole 'mod' story was an attempt by Take Two and Rockstar to push the blame for the minigames in the PC version away from themselves and onto the modding community. It was later discovered that the minigames were in the original PC game's (and later, the PS2 games) code.
I agree with the ruling wholeheartedly. The 'hot coffee' stuff shouldn't have been in the game in the first place. Rockstar knew it was there. They should have removed it before they published the game. It is the fault of the game makers that these laws are being passed, since they cannot monitor themselves, or try to get stuff past the ratings board.
And if these M rated games were being bought only by the target audience, gamers who are 17+ years old, this whole mess wouldn't even have happened. Why have a ratings board if noone's going to follow the guidelines they set up? Parents, it is YOUR job to monitor what your kids are playing. The publishers aren't going to, and the government shouldn't have to, but since you won't, there will be laws.
I invite anyone who agrees or disagrees with me to send me a message. I'd like to hear what everyone has to say on this issue. I may even start a Responsible Gamers Union for those who agree :)